Chapter 11: International accounting

accurate

free from errors, careful

allowance for uncollectable accounts

a contra asset account recording debts which may not be collected

amend

to improve by correcting exiting information

apply

to be suitable, pertinent or relevant to

comptroller

the person in charge of the financial accounts of a company

current

new, present or most recent

declare

to make known, announce officially or state clearly

dividend

a sum of money paid to shareholders

escrow

a contract, deed or bond which is deposited with a third person

exemption

not included within, unaffected by

extraordinary item

gain or loss included in financial reports which come from infrequent or unusual sources

income statement

a financial report which shows the firms net profit or loss over a given period

IFRS (international financial reporting standards)

A common set of accounting principles

inventory

a complete listing of all goods held by an entity, or the goods which are on the list

oversee

to supervise

record

to set down in writing

regulation

a law, rule or other obligation set by an authority

split

to divide between two or more

supersede

to replace in power, validity or effectiveness

the prudence principle

What value should be given to the numbers in the accounts? It is normal to act pessimistically, so that profits and assets are not overstated, and expenses and liabilities realistically valued.

objectivity principle

As accountants we should view the business and its transactions in a dispassionate way. The accounts should not be prepared with any personal bias. To avoid this bias figures should, where possible, be backed by source documents.

master budget

The total of separate budgets from different departments within a company.

financial statement

A report showing profit and loss for a business or institution

books

The books, files or computer records where a company's accounts are kept

objective

An aim or target

work load

The amount of work to be done

lay-off

Dismissing a worker for a period of time.

liquidator

The person appointed by the court to close a company and dispose of its assets.

insolvent

To be unable to pay your debts

go bust

To become bankrupt.

extraordinary income

Recently, a film a fill company paid AZ Designs a large amount of money to use the company’s premises when they were making a film. This was recorded in the Profit and Loss Account as extraordinary income

distribution

The costs of getting the goods to the customers are shown as distribution costs in the Profit and Loss Account.

administrative expenses

The secretary’s salary and expenses incurred in the office are shown as administrative expenses

petty cash

Small amounts of money which are paid out for things such as petrol, soap, and bus fares are usually recorded in the petty cash book.

beneficiary

The account which receives payment is known as the beneficiary

emitter

the account sending payment is the emitter

transaction

Each single movement of money in the account is known as a transaction

brought forward

At the beginning of each month the balance from the previous month is recorded at the top of the account as brought forward and at the end of the month as balance carried forward

carried forward

discrepancies

The bank statement should be checked against the cash book to make sure the figures are the same and that there are no discrepancies

batch

When several payments are made by computer banking they are normally transmitted to the bank together in a batch

contra

If double entry has taken place within the cash book the item does not need to be entered in another book as double entry and the item is known as contra

cleared

When a cheque is received and paid into an account it will be debited to the account once it has been cleared

threshold

There will normally be a maximum amount of money which can be transferred from an account and this is known as the threshold

denomination

This company has issued shares in £5 denomination

preference shares

At the end of the financial year, profits are first of all allocated to pay the fixed percentage dividends on preference shares.

ordinary shareholders

The ordinary shareholders have voting rights but do not have a fixed percentage dividend

bonus shares

The company have decided to issue bonus shares free of charge to their existing share holders.

nominal capital

The company is allowed to issue a total amount of shares known as the authorized share capital or _____. However, the issued capital may be less than that

authorized share capital

The company is allowed to issue a total amount of shares known as the _____ or nominal capital. However, the issued capital may be less than that

issued capital

The company is allowed to issue a total amount of shares known as the authorized share capital or nominal capital. However, the _____ may be less than that

preliminary

There were large preliminary expenses in starting the company.

uncalled capital

They have only asked for some of the amount payable on the shares, so there is still a lot of uncalled capital.

redeemable

2001/2009 written behind a debenture means that it is redeemable during that time

appropriation

The final accounts should include an appropriation account which shows how the company will use the profits.

interim

After trading for six months, the company paid out an interim dividend.